Foreign direct investment and human capital in developing countries: a panel data approach

Veasna Kheng; Sizhong Sun; Sajid Anwar

doi:10.1007/s10644-016-9191-0

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Foreign direct investment and human capital in developing countries: a panel data approach

Journal article

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Foreign direct investment and human capital in developing countries: a panel data approach

Veasna Kheng, Sizhong Sun and Sajid Anwar

Economic Change and Restructuring, Vol.50(4), pp.341-365

2017

DOI: https://doi.org/10.1007/s10644-016-9191-0

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Abstract

foreign direct investment

human capital

two-way causality

developing countries

panel data estimation

Theoretical studies have shown that there is a direct relationship between human capital and foreign direct investment (FDI). However, only a few available empirical studies have attempted to investigate this relationship simultaneously. Using country level panel data from 55 developing countries over the 1980-2011 period, this paper examines the interrelationship between FDI and human capital. Statistical analysis, based on simultaneous equations fixed effect estimation, reveals significant bi-directional causality between human capital and FDI, which suggests that FDI and human capital development policies need to be coordinated. FDI-led economic growth models may not be entirely suitable for all developing countries aiming to replicate the economic success of countries such as Brazil and China unless attention is also paid to human capital development through increased spending on education and training.

Details

Title: Foreign direct investment and human capital in developing countries: a panel data approach
Authors: Veasna Kheng (Author) - James Cook University
Sizhong Sun (Author) - James Cook University
Sajid Anwar (Author) - University of the Sunshine Coast - Faculty of Science, Health, Education and Engineering
Publication details: Economic Change and Restructuring, Vol.50(4), pp.341-365
Publisher: Springer New York LLC
Date published: 2017
DOI: 10.1007/s10644-016-9191-0
ISSN: 1573-9414
Organisation Unit: School of Business and Creative Industries; Indigenous and Transcultural Research Centre; University of the Sunshine Coast, Queensland; USC Business School - Legacy
Language: English
Record Identifier: 99450697502621
Output Type: Journal article

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